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Monday, January 14, 2008

Heads up, freelancers: Fourth estimated tax payments due tomorrow!

If you pay estimated tax payments (which you should, if you make enough to owe more than $1,000 in federal taxes at the end of the year) then take note: Your fourth estimate tax payment for 2007 is due tomorrow, January 15th.

There is one exception for this: You don't have to pay the fourth estimated tax payment if you will be filing your taxes (and paying the amount due, of course) by January 31st.

(I find that caveat amusing, by the way. If you don't have the money to pay the amount due on your taxes by January 31st, you're probably even less likely to have the money to pay the estimated tax payment by January 15th. I suppose they have to say that to avoid creating any loopholes, though.)

In any case, I'm stuck paying the last estimated tax payment: Michael and I are filing our tax returns jointly for the first time, and there's no way he'll get his W-2 from his employer in time to file by January 31st.

2 comments:

Sue said...

Just my opinion, but there is no reason why a smart freelancer wouldn't have the money to pay quarterly taxes. I always put aside 1/3 of each pay check into a special account. But I admit, my accountant says what I do is unusual.

Katharine Swan said...

Sue,

I admit I'm not the best at budgeting for quarterly taxes or other big expenses. However, I don't think it's an issue of smart freelancing, but rather good money management skills.

I think I'm pretty average -- I'm not very good at planning ahead, but I'm not so bad that I can't make my payments on time, either.

I haven't compared my methods (or lack thereof) of preparing for quarterly tax payments with that of other freelancers, but I rather suspect your accountant is correct. When you need that paycheck (as many of us do), it's difficult to not use the entire amount!

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